Enhanced Capital Allowances (ECAs)

The need to conserve water and energy has led the Government to introduce measures to encourage investment in energy efficient technologies. At the outset, incorporating energy efficient assets may seem too expensive, but if these are combined with effective tax planning, the complete asset life costs can be cut considerably.

ECAs are available to taxpayers incurring expenditure on new and unused qualifying energy and water efficient assets – for the purposes of their trade. The relief allows for 100% deduction from profits in the year of expenditure and can be matched easily against capital outlay.

This relief can represent cash savings of 23% of the asset expenditure and significant timing advantages. A payable credit is also available to businesses which incur ECA expenditure but make a loss.

ECAs are a 100% deduction for installing new energy efficient assets

Numbers
Qualifying expenditure of £200,000
	With ECAs (£)	With No ECAs (£)
Profits	1,000,000	1,000,000
ECAs	(200,000)
	800,000
Tax payable	184,000	230,000
(at 23%)

23% cash saving = £46,000

www.rocheassociates.co.uk
Head Office Saira Puffett T: 01923 428 746 E: sairapuffett@rocheassociates.co.uk	Southern Office Paul Munday T: 01794 899 028 E: paulmunday@rocheassociates.co.uk

Enhanced Capital Allowances (ECAs)

Numbers

Qualifying expenditure of £200,000